Just when the national government needed a friend, the International Monetary Fund (IMF) on Friday reiterated its expectations that Argentina’s economy should “slowly pick up in the coming years”.
In a report outlining its forecast for the country’s economic future, the IMF predicted a growth rate of 2.5 for 2018, one percentage-point less than the government’s own forecast in next year’s budget.
The report, coinciding with the last working day of the year, foresaw a final economic growth rate of 2.8 percent in 2017, up from the 2.5 percent it had expected in October.
It also raised its outlook for the country's current account deficit to 4.3 percent of GDP in 2017 and 4.4 percent in 2018, from a previous 3.6 percent and 3.7 percent respectively.
Overall, the entity’s analysis of the national government's economic policy was positive.
“The government has unwound multiple distortions and made important progress in restoring integrity and transparency in public sector operations,” it said in the 2017 Article IV report prepared in consultation with the national government from early December.
“These policy changes have put the economy on a stronger footing and corrected many of the most urgent macroeconomic imbalances.”
The Fund also indicated that it expected private consumption to bounce back in line with a recovery in real wages.
“Argentina is experiencing a solid recovery from last year’s recession and, even in the face of planned fiscal consolidation and ongoing efforts at disinflation, growth is expected to slowly pick up in the coming years.”
Argentina's Central Bank yesterday yielded to pressure from within the national government to lower its 2018 inflation target from 10 to 15 percent.
On that very issue, the IMF said: “Inflation (in Argentina) continues to fall, albeit at a slower pace than targeted by the central bank.”
The full report can be accessed here.